The best countries for entrepreneurs

Starting a business anywhere takes grit, determination and a marketable idea, but these places make it just a little bit easier for start-ups to get off the ground.

By Lindsey Galloway

9 April 2018

Starting a business anywhere takes grit, determination and a marketable idea, but certain countries make it just a little bit easier for start-ups to get off the ground.

U.S. News and World Report recently ranked the best countries for entrepreneurs based on a number of factors, including connectedness to the rest of the world, availability of a skilled and educated workforce, developed infrastructure, a well-developed legal framework, and easy access to capital.

To find out what makes the top countries primed for start-up success, we talked to entrepreneurs in each of them to uncover what business benefits these places offer and why they love living there.

With the world’s fourth-largest economy and the largest in Europe, Germany’s mix of transparent business culture, highly educated workforce and start-up friendly policies pushed the country to the top of the index.

View image of Germany is the best country for entrepreneurs, according to U.S. News & World Report (Credit: Credit: Francesco Iacobelli/Getty Images)

“Germany has high standards in business culture when it comes to ethics, law and regulations,” explained Irina Graf, who runs event management company The MICE blog and recently moved her company from the UK to Germany.

The government also makes it easy to get started with a new venture. “It was incredibly easy to set up a business in Germany. At the time, I paid 20 euros and bam, I had a business,” said Guy Arthur, who runs the eponymous Guy Arthur School of English in Stuttgart. “The government allows for a lot of write-offs in order to keep the business growing, and clients here seem to be loyal as long as you provide them with high-quality service.”

Unlike other countries (like the UK) where a single city is the economic hub, Germany has a number of large business hubs, including Berlin, Frankfurt, Munich and Hamburg.

This is especially important when testing new products for a global market, according to Jens Wohltorf, CEO and co-founder of Berlin-based chauffeur service Blacklane. “Germany has a large enough market to launch a company and test products. We learned how to launch new cities from Berlin, going further away each time to build relationships with driver partners and acquire new customers,” he said. “After travellers used us in Berlin, Frankfurt, Munich or Stuttgart, they wanted Blacklane rides in London, Milan, New York and Tokyo.”

View image of Germany has several large business hubs, including Berlin, Hamburg, Frankfurt (pictured) and Munich (Credit: Credit: joe daniel price/Getty Images)

English is also widely spoken in Germany – it is the primary business language at Blacklane and many other start-ups – which makes it easier to build a multinational company and attract diverse talent.

Even so, Germany does have some challenges for new business owners, particularly its complex tax code that almost always requires hiring an accountant or tax advisor. Graf also noted that VAT must be reported for companies whose revenue exceeds 17,500 euro compared to £85,000 (around 97,500 euro) in the UK, which can add additional administrative work at an earlier stage of the business. Housing shortages are also starting to become a problem in Berlin and other metros due to population growth, increased immigration and lack of new construction, though cost of living still remains low compared to other European capitals.

The creative spirit in Germany fuels both professional and personal life, particularly in Berlin, according to Wohltorf. “Berlin has art and culture around every corner,” he said. “It surrounds you at the city’s museums and galleries, beer gardens, markets, cafes, parks and festivals.”

Japan has long been a paradox in the business world, where a traditionally risk-averse culture has also spawned world-changing innovation. “Old technology such as faxes are ubiquitous, yet we are also surrounded by examples of cutting-edge robots and some of the coolest and most advanced ideas and gadgets,” said Joanna Crisp, general manager at travel company PEAK DMC Japan, Intrepid Group, who is originally from Australia and is now based in Kyoto.

To many businesspeople in Japan, the country is also on the brink of a major cultural shift. While people once preferred to join a big multinational corporation with the promise of lifelong employment, today’s youth leans toward smaller, more entrepreneurial companies. “Some of the barriers that were there in the past are being removed,” Crisp said. “There are more incubators, more funds for start-ups and better networking between people working in start-ups.”

The economy’s heart is in Tokyo, where a sizeable expat community makes it easier for foreigners to make professional connections. “Tokyo has plenty of international opportunities for people to be involved and connected to each other, while also having unique experiences only accessible in Japan and created by Japanese culture,” said Japanese native Kohei Kurihara, who is co-founder and CMO of collaboration platform CollaboGate.

While English is spoken by some in Tokyo and the government is actively training more English speakers in preparation for the 2020 Olympic Games, learning the Japanese language and social mores are essential for any entrepreneur in Japan. “To be successful you need to be able to read between the lines and learn the hidden layers of Japanese business and social etiquette,” Crisp said.

View image of Joanna Crisp: “To be successful you need to… learn the hidden layers of Japanese business and social etiquette” (Credit: Credit: nattrass/Getty Images)

Opportunities to escape the busy pace of start-up life is one of the perks of living in Japan, with numerous nature getaways across the island nation, particularly in Kyoto, which Crisp calls ‘the cultural heart of Japan’. “I grew up in a small city and I love to be surrounded by mountains and rivers where a short walk or bike ride takes me out of the business district into the forests and nature,” she said. “Right now, the snow is falling on the wooden roof of a nearby temple and the vermilion-coloured lanterns in its courtyard. There is nothing like watching the seasons change in such a romantic destination.”

Japan also consistently ranks high as one of the places where people live the longest – due to its quality of life, sense of community and healthy diet.

The American Dream – where anyone can become anything they want if they put their mind to it – still defines the US for many of its residents, especially those who want to start a business.

View image of Many successful US technology start-ups are located in Silicon Valley, California (Credit: Credit: Steve Proehl/Getty Images)

“We are willing to fight for what we want and demand a better life from those who seek to block progress,” said Jason Patel, Washington DC resident and founder of college prep company Transizion. “This rebellious nature is in our DNA: the American Revolution, coming back from the Great Depression, winning the Space Race and producing so many incredible inventions. We are a people who respect those who risk their livelihoods to live out their dreams.”

Unlike in many other cultures, failure isn’t frowned on here, but is looked on as a learning experience. “Entrepreneurs are encouraged to take risks and test the status quo,” said Wen-Wen Lam, CEO and co-founder of San Francisco-based travel management platform NexTravel. A culture of entrepreneurship also means there are plenty of mentors who are happy to help budding business owners.

We are willing to fight for what we want and demand a better life from those who seek to block progress

While many recent successful tech start-ups are headquartered in California’s Silicon Valley, New York City and other US metros harbour their fair share of start-ups. Because the US has a fairly uniform culture and a large market, scaling nationwide is easy here, says Lam.

Hiring can be tough in competitive markets like Silicon Valley, where the now-massive tech giants compete for the best talent with top salaries and perks. “For smaller start-ups, you have to sell the idea of having a great impact and ability to affect change,” Lam added.

That belief in having a voice affects day-to-day life in the US, where one person, one vote, still impacts the culture. “There is nothing holier than this premise in democracy,” Patel said. “Engaged citizens can organise and inspire their peers to vote and enact change, and improvements in their community is the backbone of having high expectations for our country.” This belief also allows a diversity of perspectives and views to be widely appreciated.

View image of Residents can take advantage of the US’ extensive national park system (Credit: Credit: Chiara Salvadori/Getty Images)

The national park system here is also one of the best in the world, and residents take full advantage of seeing them wherever they live. “Only in America can you go from the Death Valley desert to Yosemite mountains to Zion canyons to Yellowstone lakes,” Patel said. “I'm lucky enough to have visited all of them. It's natural beauty at its finest, seeing what existed before humans and what will exist after our time on this planet is done.”

United Kingdom

Though Brexit has created some uncertainty around the future of Britain’s trade relationship with Europe, many entrepreneurs still believe it’s a great place to start a business due to its low barriers to entry and strong business community and talent pool.

“I registered my business with Companies House for £12 (this can cost up to $500+ in some US states) and opened a business bank account online in minutes,” said David Murphy, who started watch company Oliver Coen in London last year. The government also makes numerous online resources available, such as government-backed start-up loans and free business plan templates, and filing business taxes can be fast and easy. “While I do use an accountant to save me time, it is simple enough that I could do it myself. The paperwork is very straightforward and taxes are very simple to understand,” said Canadian Ian Wright, founder of merchant comparison site MerchantMachine.co.uk. “Plus, the government has committed to continue to cut corporation tax, which means tax rates are very competitive.”

View image of Low barriers of entry and a strong talent pool make the UK a good place to start a business (Credit: Credit: Alexander Spatari/Getty Images)

Financing is easier to come by in the UK, attracting just more than £4 billion in investment – the largest amount of venture capital of all European countries – in 2017. “We've been approached by a number of angel investors who have offered finance and mentorship,” Murphy said. “We've also been invited to apply for government grants, but we turned this down because we don't need financial support at this time.”

The community here, especially in London, also leads to start-up success, as it’s easy to hire the right employees or freelancers, and face-to-face business meetings are a breeze to set-up. “I'm very worried what impact Brexit will have on the huge range of talent available in London from across Europe,” Wright said. “But as of today, I think you'd struggle to find as much talent concentrated in one place outside of Silicon Valley.”

Being in the UK, everything is available on my doorstep

Murphy agreed, adding, “Whether I need a world-class product photographer, social media expert or creative director, being in the UK, everything is available on my doorstep.”

The high costs of housing in London can be a struggle for business owners and potential employees. “The only house I could afford was at the edge of London and was about half the size of what I could get in Canada,” Wright said. Still, having free NHS healthcare makes starting a business a bit less risky. “I don't have to worry if I suddenly become sick or injured,” he said. “Honestly, I think public healthcare is the number-one thing governments can do to encourage entrepreneurship.”

View image of London’s high housing costs can prove challenging for business owners and potential employees (Credit: Credit: David Cabrera/Getty Images)

Besides the business climate, Wright says he loves to live in London because of the combination of history and modern culture. Locals also love the multiculturalism of the capital city, where people from all over the world live side-by-side to create a rich landscape of food and culture.

Switzerland

Due in part to its lack of natural resources, Switzerland has long invested instead in research and development to grow its economy. This has paid off well, with the country as becoming an international leader in banking and finance.

“Switzerland has traditionally had a robust financial sector, with compliance and expedient government regulation at its core,” said Marco Abele, former chief digital officer of Credit Suisse, and CEO and founder of blockchain investment platform TEND, based in Zug. “Swiss culture is interesting in that these traditional values, embedded in the Swiss financial sector for decades, are readily transferable for entrepreneurs in their respective field of interest.”

Lately, that expertise has been put to work in a new way, as the country has become a hub of cryptocurrency and blockchain-based start-ups. “Switzerland is leading the way in terms of implementing core values inherent in the traditional financial sector into this new industry,” Abele said. “Swiss universities, too, are embracing this change, researching blockchain and its impact on the world with an intellectual curiosity that is uniquely Swiss."

View image of Known as ‘Crypto Valley’, Zug is home to a number of cryptocurrency companies (Credit: Credit: Rosmarie Wirz/Getty Images)

In particular, the city of Zug in north-central Switzerland has earned the nickname ‘Crypto Valley’ for the number of cryptocurrency start-ups in the area. The city is home to the Ethereum Foundation, the blockchain platform behind many new decentralised applications as well as the second-largest cryptocurrency, trailing only Bitcoin in terms of market cap. “Many crypto projects choose Switzerland for their headquarters for similar reasons as other international organisations and companies: the Swiss neutrality, stability and tax regime,” said Nabil Naghdy, COO of mobile Ethereum operating system Status.

Switzerland is leading the way in terms of implementing core values inherent in the traditional financial sector into this new industry

In addition to a friendly regulatory environment and business-friendly tax rates, Swiss start-ups also benefit from its central location within Europe, making trade and finding talent easier. “Due to its diversity, the language fluency of its population and the high standard of living, Switzerland is a popular work location for expats,” Naghdy said.

Though the extremely high cost of living here is often initially painful for newcomers, seasoned entrepreneurs say the benefits and returns of being a part of the Swiss economy outweigh the costs. Those returns also pay off in the day-to-day lifestyle, as residents enjoy access to world-class schools and educational opportunities, as well as the natural beauty of the surrounding Alps. Switzerland’s central location within Europe means locals can also take regular advantage of the fast and cheap flights across the continent for weekend getaways.

Join more than three million BBC Travel fans by liking us on Facebook, or follow us on Twitter and Instagram.

If you liked this story, sign up for the weekly bbc.com features newsletter called "If You Only Read 6 Things This Week". A handpicked selection of stories from BBC Future, Earth, Culture, Capital and Travel, delivered to your inbox every Friday.